Should The Fed Raise Interest Rates Now - 1372 Words

Finally, the process of normalization has begun, and seven years of zero interest rate cycle came to an end in December 2015 with a hike of 25 basis point by the Federal Open Market Committee. It was a much anticipated move for a while, and now the debate is on the roadmap of future interest rate hikes. Several economist, analyst, and media personalities have expressed a variety of opinion on both ends of the rate hike. Should the Fed continue to raise interest rates now, is the question of global consideration. In my opinion, Fed should continue to raise interest rate now to help the economy grow more independently and build up consumer confidence. Some of my findings that support my opinion to raise interest rates now are below: Economic Indicator’s: The US economy has recovered considerably from the great financial crisis of 2008. We are currently in the seventh year of expansion, and the overall performance of the economy has been satisfactory. Most economic indicators have improved dramatically, and some of them are at the best level since then. A significant recovery in home prices, GDP, labor market, stock markets, auto sales, and consumer spending have fostered the economic growth and restored the confidence of market participants. Major stock market indices globally are trading near the high levels of 2007-2008. Some countries like India have surpassed the previous highs of 2008, and are trading comfortably higher (^BSE, Jan 2008: 20,000 approx.; May 2016: 25,000Show MoreRelatedNotes On Raising Interest Rates1369 Words   |  6 PagesEcon Macro Memorandum To: FOMC From: Nicholas W Gallo, LLC. Date: 12/1/2015 Subject: Raising Interest Rates To members of the FOMC, this is my proposal that you take action at your next meeting and gradually raise the interest rates to %1 within the first quarter 2016. †¢ Members o Janet L. Yellen, Board of Governors, Chair o William C. Dudley, New York, Vice Chairman o Lael Brainard, Board of Governors o Charles L. Evans, Chicago o Stanley Fischer, Board of Governors o Jeffrey M. Lacker,Read MoreNotes On Monetary And Monetary Policy935 Words   |  4 Pages The Fed hasn t raised the interest rate since the Financial crisis 2008 and it said that the interest rate would keep near zero for now, as expected, but it added an unusually explicit statement that it would consider raising rates at its final meeting of the year in mid-December. From the perspective of monetary restraint policy this essay will deal with if the interest rate would raise or not from the aspects of monetary restraint policy. My purpose is that Fed would definitely raise the interestRead MoreThe Effects Of Fed On The Global Economic Disturbances Shadow1278 Words   |  6 PagesFed Will Probably Raise Rates 1 Time This Year Due To The Global Economic Disturbances Shadow. Fed is not determined to go ahead with raising interest rates 4 times in 2016. Growth expectations have been continuously downgraded. Economists continue to lower interest rate estimates. A Brexit could seriously affect Fed’s stance. After seven years of the most accommodative monetary policy in the history of the US, on the 16th of December last year, the Fed decided to raise interest rates from 0.25%Read MoreUnited States : Interest Rate Hike1202 Words   |  5 PagesUNITED STATES: Interest rate hike UNITED STATES: Interest rate hike grows in uncertainty US interest rate hike grows in uncertainty Global volatility may delay the pace of the Federal Reserve s normalisation of monetary policy EVENT The Federal Open Market Committee (FOMC) of the Federal Reserve (Fed) meets on September 16 and 17, in what will be one of the most awaited meetings in recent years. SIGNIFICANCE The chance of a rates lift-off at this meeting has receded recently and currently standsRead MoreA Summary Of The US Monetary Policy : Peering Into 20181595 Words   |  7 Pages2017. Consequently, incoming Fed Chairman Powell may be forced to forge an appropriate monetary offset in 2018. US economic activity accelerated during 2017, partly due to a recovery in oil prices that helped to spur higher capital spending. Crucially, faster underlying growth has pushed the economy into above-trend expansion territory. The Federal Open Market Committee (FOMC) believes long-term potential GDP is merely +1.8% against a current backdrop of +2.3%. Fed policy conduct next year willRead MoreShould Feds Continue with Expansionary Monetary Policy or Exit Strategy?863 Words   |  4 PagesOver the past few years, the Fed had been trying to heal the economy from the recession by lowering the interest rate near zero in order to raise the inflation, increasing the price of housing and household wealth. This will encourage more people to buy products or services, causing an increase in consumers spending. Based on the data given by the U.S. Department of Commerce today, the economy is now healing from the recession with the expansionary monetary policy. However, some people argue thatRea d MoreEssay on Fed and Interest Rates1158 Words   |  5 Pages The Fed and Interest Rates nbsp;nbsp;nbsp;nbsp;nbsp;Dave Pettit of The Wall Street Journal writes a daily column that appears inside the first page of the journals Money amp; Investment section. If the headlines of Mr. Pettits daily column are any accurate record of economic concerns and current issues in the business world, the late weeks of March and the early weeks of April in 1994 were intensely concerned with interest rates. To quote, quot;Industrials Edge Up 4.32 Points Amid CautionRead More The Federal Reserve System Essay example1453 Words   |  6 PagesFederal Reserve System (Fed) was created by the Federal Reserve Act. According to Congress, the role of the Federal Reserve System is to promote maximum employment, stability and growth of the economy, and moderate long-term interest rates. The Fed employs Monetary Policy in an effort to manage both the money supply and interest rates while stimulating the economy to operate close to full employment. One school of thought called Monetarism believes th at the Federal Reserve should simply pursue policiesRead MoreUnconventional Monetary Policies for Central Banking1167 Words   |  5 Pagesdecades, most of the world’s Central Banks have widely used open market operations to influence the short term interest rates and achieve their main objectives of controling inflation and promoting economic growth. Recently, however, the short term interest rates in major developed economies have reached the so-called â€Å"zero lower bound† (i.e. they cannot be lowered anymore because with interest rate equal to zero people would simply prefer to keep their money as cash). Given the grim economic outlookRead MoreThe Federal Reserve And Central Banking System1109 Words   |  5 Pagesin the United States. It has 12 regional banks around the nation, its headquarters being located in Washington DC. The Federal Reserve (better known as the Fed) was established in 1913 by Congress in order to â€Å"provide the nation with a safer, more flexible, and more stable monetary and financial system† (federalreserve.gov). Although the Fed was created over a century ago, it is still a major influence in the banking systems today. The concept alone of a central banking system has been